Spain cut Rx spending 8.8% in 2011, but owes drugmakers 6.3B euros

Spain reduced its prescription drugs bill a record 8.8% in 2011, but the industry says that by year-end the regional governments owed drugmakers a total of 6.37 billion euros.

Government spending on prescription drugs fell to 11.136 billion euros last year, down 1.4 billion euros on the total for 2010, when drug expenditures had declined by nearly 2.4%, according to local reports. These reductions have been achieved through a range of cost-cutting measures, the most successful of which was a Royal Decree taking effect last November 1 which requires prescriptions to be written according to the active pharmaceutical ingredient (API). However, this and the other measures are causing problems for small and medium-sized pharmacies, which are expecting to bear losses averaging 100,000 euros each per year by the end of 2012 as a result of the austerity measures, according to pharmacy associations.

Spanish media reports also note that the number of prescriptions written in the country grew only 1.6% last year, compared with increases of 2.5% and 4.9% in 2010 and 2009, respectively. However, the value of prescribing in the hospital sector increased 55% from 2008 to 2011 to reach a value of 5.8 million euros in 2011, they add.

Commenting on the reports, analysts at IHS Global Insight note that Spain’s pharmaceutical expenditures are expected to fall further this year, reaching a forecast annual decline of 13.36% to 9.732 billion euros by the end of 2012.

However, the analysts also note that this pattern can only be maintained if Prime Minister Mariano Rajoy's new centre-right conservative People's Party (PP) government, which took office on December 21, continues to apply the cost-cutting measures implemented by the previous administration. So far, the new government is not expected to implement any radical changes in the short term, although, in the medium-to-longer term, some changes might be made to address to the concerns for the sector expressed by the national and regional industry associations, they add.

Last week, industry association Farmaindustria reported that Spain's 17 regions owed pharmaceutical companies a total of 6.37 billion euros by the end of last year. The debt was now 36% higher than at the end of 2010, with payments being delayed by an average of 525 days, the group added.

Farmaindustria has also reported that companies are owed 5.4 billion euros by the regional governments for drugs supplied to hospitals, with payments being made an average of 430 days late.

At the end of last week, the government announced that it will be introducing tighter new controls on spending by the regions, which overshot their expenditure targets by around 15 billion euros last year. The measures are expected to include closer monitoring of deficit targets to pick up problems at earlier stages and penalties for consistent overspending.